Man Group＊s large-cap Japan value fund is shifting more to domestic-focus stocks as it expects the agenda of the nation＊s new administration to benefit local economies.

Since Prime Minister Sanae Takaichi was elected as Japan＊s new leader, Man Japan CoreAlpha Fund has built up stakes in sectors like regional banks that are poised to outperform if the domestic economy picks up.

※Right now we do feel more confident in the domestic reflation story and that＊s since the election of Prime Minister Takaichi,§ Emily Badger, a co-manager of the fund, told Bloomberg in an interview in Tokyo on Thursday. ※We quite like that she is pro-growth and pro-business, and we think that this is quite an exciting time for Japan.§

The U.K.-listed fund has returned around 20% over the past year, outperforming 90% of its peers, according to data compiled by Bloomberg. Its total assets amount to roughly ?2.69 billion ($3.6 billion).

The Takaichi Cabinet approved last month a ?18.3 trillion ($118 billion) extra budget to fund a stimulus package that includes measures to help households cope with high prices.

Badger＊s top picks are financials, which include both banks and brokerages. While banks will see improved margins if the Bank of Japan raises interest rates, securities houses are poised to profit as retail investors turn to riskier assets to protect against inflation, she said.

※It＊s not just a a rate story for the banks,§ she said. ※We think that at the center of the story for a stronger domestic economy will be the banks essentially.§

The fund maintains overweight positions in real estate developers, telecom and retailer shares that would benefit from increased consumption. It holds stakes in NTT and Seven & i Holdings as of September, according to data compiled by Bloomberg.

Even despite the shift in focus, she remains optimistic about some exporter shares, particularly around automakers whose valuation remains cheap with price-to-book ratios of around 1. In contrast, the fund is pulling back from bets on factory automation which has rallied on expectations of artificial intelligence demand.

While cautioning that Nikkei 225 may face volatility in the event of a selloff in AI names, Badger expects Takaichi and her policy agenda will support the broader Japanese market too.

※The overall underlying strong foundation for Japan of political stability, a dynamic leader, the continuation of corporate reform should be positive for the equity market in the medium term,§ she adds.